The Affordable Care
Act: A Summary on
Healthcare Reform
The Wyoming Department of Insurance
The ACA is a federal law that impacts Wyoming and its citizens.
The State of Wyoming has filed a lawsuit against the federal
government in opposition of the law and currently maintains
that position. This information is solely for informational
purposes and to let Wyoming citizens know how they will be
impacted by federal law. It is not intended to provide legal
advice, accounting advice or any opinions. This presentation is
to provide only general, non-specific information and is only a
general guide. It does not include all the details found in the Act
and is not intended to express any opinions of the State of
Wyoming as to the interpretation of the Act nor is it bound by
its content. For the application of the Act to a particular
situation, the reader is advised to consult the specific provisions
of the Act and obtain advice from the appropriate source.
ACA Misunderstandings
• It has been repealed
• 45% of Americans believe this is true
• I am not required to buy health insurance
• It is going to be more expensive
• Maybe not for 100-400%
• Because of my health I cannot get insurance or it is far too
expensive
• All employers must provide health insurance
• There will be a government run insurance plan along with
private plans
• Wyoming will not have an insurance (exchange) marketplace
(shop exchange)
Healthcare Reform – So Far
• September 23, 2010 Immediate reforms:
• No lifetime limits and restricted annual limits
• Elimination of denial for pre-existing conditions for
children under age 19
• Adult Dependent Child coverage up to age 26
• Coverage of preventive benefits
• Rate Review Standards (rate increases 10%+ reviewed)
• Medical Loss Ratios with Rebates
2014 Market Reforms
For Small Group and Individual
Coverage Sold or Renewed on or after
January 1, 2014:
• Guaranteed Issue (cannot be denied or rated because of any
health condition)
• No Pre-Existing Condition Exclusions
• Insurance Rating Guidelines (Can only charge a different rate
for smoking, age, geographic area)
• Essential Health Benefits & Cost-Sharing Must Meet
Established Value Levels
These apply inside and outside of a marketplace
Insurance Rating Guidelines
For the Small Group and Individual Markets:
• No rating based on health status
• Maximum age variation of 3:1 (ages 21-64)
• Maximum variation based on tobacco use of 1.5:1
• Rates based on geographic areas
• Family rates built up based on age and tobacco use of
each member
• A family premium is the sum of the individual premium
for each adult and each child up to 3 under age 21.
Do I have to
do anything?
Individual Mandate
• Individuals required to have minimum qualified coverage beginning
January 1, 2014
Penalties
2014
$95 per adult up to $285 or 1% of
household income, whichever is
higher
2015
$325 per adult up to $975 or 2% of
household income, whichever is higher
2016
$695 per adult up to $2,085 or 2.5% of
household income, whichever is higher
Penalty for a child is ½ that of an adult
Penalties indexed to the growth of CPI after 2016
Individual Mandate
What is “Minimum Qualified Coverage”
Medicare
Medicaid
CHIP
Tri-Care
Employer Sponsored Coverage
Individual Market Coverage
Grandfathered Coverage
Exemptions:
•
Cost of coverage is more than 8% of household income
•
Religious objection
•
Financial hardship
•
Tribal members
What will I do?
What will I do?
•Keep what I have
•Purchase inside the
marketplace
•Purchase outside the
marketplace
•Do nothing
Grandfathered Plans
• Coverage in which individuals were enrolled
prior to March 23, 2013 are exempt from most
provisions of the bill.
Provisions that DO Apply:
•
•
•
•
•
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Lifetime limits
Restrictions on rescissions
Extension of dependent coverage
Medical loss ratios
Annual limits (group only)
Preexisting condition exclusions (group only)
• Grandfather Status Can Be Lost
• Grandfathered plans will satisfy individual
mandate
• Check with insurance agent or company to see
if your current plan qualifies for grandfather
status.
What is a marketplace (exchange)?
•
•
•
•
Virtual marketplace
Qualifies individuals for Medicaid, CHIP or premium subsidies
Offers only qualified health plans and dental plans
Two marketplaces
• 1 – Individuals
• 1 – Small Groups
• Three types of marketplaces
• State based
• Partnership
• Federally facilitated marketplace (Wyoming)
• On October 1, 2013 you can enroll for health insurance at:
www.healthcare.gov
Marketplace
Product Portfolio
• All plans must include essential health benefits.
•
Ambulatory patient services
•
Emergency services
•
Hospitalization
•
Maternity and newborn care
•
Mental health and substance use disorder services, including behavioral health treatment
•
Prescription drugs
•
Rehabilitative and habilitative services and devices
•
Laboratory services
•
Preventative and wellness services and chronic disease management
•
Pediatric services, including oral and vision care
• Benefit levels:
• Platinum = 90% value (Insurance should pay 90% of covered health care costs)
• Gold = 80% value
• Silver = 70% value
• Bronze = 60% value
• Catastrophic Plan (limited to young and those without affordable option in the
market)
Plan Design
• A child-only plan must be offered at the same metal tier as
any health plan that the issuer offers.
• Limited to individuals who are under age 21 as of the beginning
of the plan year.
• A catastrophic plan is available to individuals who are under
age 30 or who are exempt from the individual mandate due to
a hardship or where cost of coverage, exceed 8% of income.
• Each issuer selling in the marketplace must offer at least one
silver level, one gold level, and a child-only.
Plans Available in the
Marketplace
•
Qualified Health Plans
•
Stand-Alone Dental Plans
•
CO-OP Plans (not available in Wyoming)
•
Multi-State Plans (not available in Wyoming)
2013 Federal Poverty Level Table

Updated annually—usually in late January
Subsidies: Premium
Tax Credit
•
•
•
•
Available from
100% - 400% FPL.
Covers the difference between
premium for
the second-lowest-cost Silver
plan and a percentage of
income.
Advanced to insurer.
Must purchase coverage in the
individual marketplace
Calculated based upon
estimated income recipients
may have to repay excess credits
if actual income is higher.
Premium Tax Credits
Premium Cap as % of Income
•
10%
9%
8%
7%
6%
5%
4%
3%
2%
1%
0%
100%
133%
150%
200%
250%
300%
400%
Household Income as % of FPL
Premium Tax Credit Calculation
• Example: Family of Four with Income of $50,000, Purchases
Benchmark Plan
• The Premium Tax credit is generally based on the benchmark
plan. The family’s expected contribution is a percentage of the
family’s household income.
•
•
•
•
•
•
•
Income as a Percentage of FPL:
Premium cap as a percent of income
Expected Family Contribution:
Premium for Benchmark Plan:
Premium Tax Credit:
Premium for Plan Family Chooses:
Actual Family Contribution:
224%
7.14%
$3,570
$9,000
$5,430 ($9,000 - $3,570)
$9,000
$3,570
Cost-Sharing Reductions


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


Lowers the out-of-pocket costs at the point of service and has the
effect of increasing the actuarial value of a plan.
Only available to individuals enrolled in a silver-level qualified
health plan.
The amount varies with income:
There will be no cost-sharing for a Tribal member with household
income below 300% FPL.
There will be no cost-sharing for any Tribal member who receives
care from Indian Health Services or related provider.
Due to mid-year income fluctuations, reconciliation will occur
annually.
Individual Coverage and
Enrollment
Effective Date
For Coverage Purchased:
January 1, 2014
On or before December 14, 2013
February 1, 2014
Between 12/15/2013 – 1/15/2014
March 1, 2014
Between 1/16/2014 – 2/15/2014
April 1, 2014
Between 2/16/2014 – 3/15/2014
May 1, 2014
Between 3/16/2014 -3/31/2014
Initial open enrollment period will be October 1, 2013 –
March 31, 2014.
 Annual enrollment will occur between October 15 –
December 7.
 Special enrollment period of 60 days from the triggering
event.
 In the marketplace special enrollment period will be 60
days from the triggering event.

Marketplace Responsibility
• The Marketplace is responsible for determining the date the
special enrollment period begins. Special enrollment triggers
include:
• An individual or dependent losing minimum qualified
coverage;
• An individual gaining or becoming a dependent through
marriage, birth, adoption, or placement of adoption;
• An individual experiencing an error in enrollment;
• When a plan or issuer substantially violates a material
provision of the contract in which the individual is enrolled;
• An individual becomes newly eligible or newly ineligible for
subsidies or a change in cost-sharing reductions; or
• When new coverage becomes available as a result of a
permanent move.
How Do I Enroll?
•
•
•
•
•
www.healthcare.gov
Toll free number 1-800-318-2596
Navigators
Potential Consumer’s Assistors across the State
Potentially Agents/Brokers
Outside the Marketplace
• An issuer can offer only in the Marketplace, only outside the
Marketplace, or a combination of both.
• No subsidy or cost sharing reduction outside the marketplace
• Outside the marketplace companies may have products that
will not qualify as minimum qualified health coverage (Tax
penalty)
• Limited benefit plans
• Specific illness plans (cancer policy)
• Need to check with agent/company to see if plan satisfies the
Federal mandate
• Contact agents/brokers/companies to purchase
• Insurers may restrict sales of new policies in the individual
market to open enrollment periods that align with those for
marketplaces.
What Size of a Group
Do I Have?
How to determine Full Time
Equivalents (FTE)?
• ACA refers to FTE rather than actual number of
employees.
• To calculate total FTEs, add the following:
• All employees who work at least 30 hours per
week (full time); PLUS
• Total number of hours worked in a month by
part-time employees (<30 hours per week)
divided by 120.
FTE Calculation Example
• Employer has 35 employees regularly working at
least 30 hours per week and 16 employees
regularly working 24 hours per week (total of 96
hours per month).
• Full time = 35
• Part time = [16 employees X 96 hours] = 12.8
120
• Total FTE = 47.8
• Federal government guidelines specify to round
down to the nearest whole number
Seasonal Employee:
• Definition: Performs labor or services exclusively during
certain seasons or periods of the year which, from its
nature, is not continuous or carried on throughout the
year.
• Includes retail workers employed exclusively during
holiday seasons.
• If employer’s workforce exceeds 50 FTE for no more than
120 days during the calendar year and the employees in
excess of 50 were seasonal workers, then the employer is
not considered to have more than 50 employees.
New Employees:
• If the new employee is reasonably
expected to consistently work at least 30
hours per week, then consider the
employee as full time.
Small Employers
• 1-49 full-time or full-time equivalent employees
during the preceding calendar year. The fulltime equivalent employee count includes
seasonal employees (if they work more than 120
days per year).
• There is NO penalty for small employers who do
not offer health insurance to their employees.
Subsidies: Small Business Tax
Credit
•
•
•
•
Businesses with 25 or fewer employees.
Average wages less than $50,000.
Contribute at least 50% of premium.
Phases out as size and wages of business increase.
• 2010-2013: Up to 35% of total employer contribution.
• 2014 and later: Up to 50% of contribution.
The Marketplaces (exchanges)
•
Small Group (SHOP) Marketplace:
•
•
•
For small employers 1-49 (“1” defined as employer and one
employee) – 70% participation rate allowed in federal SHOP.
Employer may choose coverage level and allow employees to
choose from insurers offering at that level beginning in 2015.
Marketplace collects and combines premiums and sends to
insurers beginning in 2015.
Small Group Coverage and
Enrollment
• Initial open enrollment period will be October 1, 2013 –
March 31, 2014.
• Enrollment may occur at any time if that small employer
has a 70% minimum participation rate (the level of
participation of the employees).
• Annual enrollment period will occur between November
15 – December 15.
• Special enrollment period of 30 days (60 days for those
losing Medicaid or CHIP coverage) from triggering event.
• Enrollment periods will be the same inside and outside
the Marketplace.
Large Employers
• 50+ full-time or full-time equivalent employees during the
preceding calendar year. The full-time equivalent employee
count includes seasonal employees (if they work more than
120 days per year)
• Large employers MUST provide minimum qualified and
affordable health insurance or pay a penalty.
• Minimum qualified coverage means that insurance pays for at
least 60% of covered healthcare expenses.
• Affordable means it cannot cost the employee more than 9.5% of
that employee’s income.
Employer Penalties
• The penalty for large groups (50+ FTE) not providing health insurance, if at
least one employee receives a subsidy from the Marketplace, will be $2,000
per each full-time employee above the first 30 workers.
• Example: A business employs 55 full-time employees; 2 receive a
subsidy. The employer would pay a penalty of $50,000.
($2,000 x (55-30) = penalty).
• The penalty for not providing affordable coverage will be $3,000 annually
for each full-time employee who receives a subsidy from the Marketplace,
with a maximum of $2,000 times the number of full-time employees above
the first 30 workers.
• Example: A business with 55 full-time employees; 2 receive a subsidy.
The employer would pay a penalty of $6,000. ($3,000 x 2) = penalty. The
maximum penalty for this business would be $50,000.
Employer Notification
Responsibilities
• The Affordable Care Act § 1512 created the Fair Labor Standards Act
which requires an employer subject to the Fair Labor Standards Act
(the usual test is not less than $500,000 in annual dollar volume of
business) to provide written notice on insurance coverage.
• Information on the marketplace services and how to contact the
marketplace.
• If employer provided insurance pays for at least 60% of covered
healthcare expenses for a typical population.
• If less than 60%, tell employees that they may be eligible for cost
assistance through the marketplace.
• If the employee purchases insurance in the marketplace, they may
lose the employer contribution (if any) and that all or a portion of
the contribution may be excludable from income for tax purposes.
• The Department of Labor has provided model notice forms.
http://www.dol.gov/ebsa/healthreform/
Employer Notification Deadlines
• New employees—at the time of hiring beginning October
1, 2013.
• Within 14 days of an employee’s start date.
• Current employees—no later than October 1, 2013.
Self-Insured Groups
• Self-insured groups are not required to:
•
•
•
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Cover essential health benefits
Limit deductibles
Justify large rate increases
Extend health insurance to anyone who applies (but
they cannot discriminate based on a pre-existing
condition)
• Guarantee to renew coverage
• Standardize cost-sharing tiers based on actuarial value
• Prohibit higher premiums based on health status
Penalties for Employers not offering affordable coverage
Does the employer have at
least 50 full-time
equivalent employees?
START HERE
No
Penalties do not
apply to small
employers
If the employer has 25
fewer employees and
average wage up to
$50,000.00, it may be
eligible for a health
insurance tax credit.
Yes
Does the employer offer
coverage to its workers?
No
Did at least one employee
receive a premium tax
credit or cost sharing
subsidy in an Exchange?
Yes
The employer must
pay a penalty for not
offering coverage
The penalty is $2,000 annually
times the number of full-time
employees minus 30. The
penalty is increased each year
by the growth in insurance
premiums..
Yes
Does the insurance pay
for at least 60% of
covered health care
expenses for a typical
population?
No
Employees can choose to
buy coverage in an
Exchange and receive a
premium tax credit.
The employer must
pay a penalty for not
offering affordable
coverage
Yes
There is no penalty
payment required of
the employer since it
offers affordable
coverage.
No
Do any employees have to
pay more than 9.5% of
family income for the
employer coverage?
Yes
Those employees can
choose to buy coverage in
an Exchange and receive a
premium tax credit.
The penalty is $3,000 annually
for each full-time employee
receiving a tax credit, up to a
maximum of $2,000 times the
number of full-time employees
minus 30. The penalty is
increased each year by the
growth in insurance premiums.
Additional Resources
• Wyoming Insurance Department: http://doi.wyo.gov/ or toll
free at 1-(800)-438-5768
• Information on the Federal Healthcare Reform:
www.healthcare.gov
• Internal Revenue Service—Information on the Penalty:
For Employers: http://www.irs.gov/uac/Newsroom/Questionsand-Answers-on-Employer-Shared-Responsibility-ProvisionsUnder-the-Affordable-Care-Act
For Individuals: http://www.irs.gov/uac/Questions-andAnswers-on-the-Individual-Shared-Responsibility-Provision
• The Henry J. Kaiser Family Foundation—General Information
on Health Insurance and Health Care
Reform: http://healthreform.kff.org/